ISPs To Fight Net Neutrality Order in Congress, Courts, Next Administration, Says Mediacom CEO

ISPs will battle FCC reclassification of broadband service under Communications Act Title II in the courts, on Capitol Hill and possibly through pressure on a successor executive branch and FCC, Mediacom CEO Rocco Commisso told us in an interview shortly after Thursday’s commission meeting (see 1502260043). The interview will be shown on C-SPAN's The Communicators. The FCC and the courts are likely to take “a long time” to resolve the likely challenges to net neutrality rules, Commisso said. Though he didn’t say Mediacom would sue over the new rules, he said it was a possibility and he was sure many entities would. The FCC’s open Internet order will create such a windfall for Washington attorneys that they’ll be able to take yearlong vacations, he told us.

There is “no doubt” that Title II reclassification will lead to increased costs for consumers because it threatens the return on investment ISPs make in their networks, said Commisso. If infrastructure investment “costs me more money, and I can’t pass it on to a Netflix or a Google or anybody else, then who is going to pay for that investment?” Commisso asked. Mediacom spent $1.1 billion on capital expenditures over the past four years, and has been able to significantly increase its customers’ speeds every two or three years, Commisso said. With more speed-intensive technology in the offing, Commisso said that if he can’t expect a reasonable return on investment, he won’t be able to pump enough money into improving the company’s infrastructure to keep up.

Though Chairman Tom Wheeler and Commissioner Mignon Clyburn said Title II rules won’t lead to rate regulation or additional taxes on ISPs, Commisso said there’s a shelf life on those promises. The net neutrality rules may not include such costs “on Day One,” but the increased ability of customers to file complaints against ISPs with the FCC under Title II is likely to eventually lead to rate regulation, he said. “We don’t know what the next commission’s going to do.” That uncertainty discourages him from investing in his network, Commisso said.

The net neutrality rules favor Internet companies like Facebook, Google and Netflix over ISPs, and are “screwing the consumer so someone in Silicon Valley can bring the dough in,” Commisso said. It “doesn’t make sense that the people making money are the good guys,” while “the people investing and borrowing money to invest are the bad guys,” Commisso said. Though Mediacom had agreed not to use paid prioritization even before Thursday’s order, there are aspects of it that make sense, Commiso said. “People should pay for what they use.” Netflix and other similar companies have been able to succeed because the cost of distributing their product to the consumer is nil, because they use networks paid for by ISPs such as Mediacom, Commisso said. Other cable operators including Comcast and Charter Communications said Thursday that while they objected to the regulatory risks that Title II brings, they, too will abide by net neutrality.

The FCC raising the speed threshold of what’s considered broadband is also a strike against Mediacom’s investment in its network, Commisso said. Because Mediacom’s previous investment in its network makes it one of the few ways customers in its footprint can have broadband over that threshold, the FCC treats Mediacom as a monopoly, Commisso said. “Maybe I shouldn’t have invested the money?” he said. “I would be below 25 [Mbps download speed] along with everybody else and then there would be seven competitors there instead of on.” Customer churn at Mediacom shows its market power is overstated, he said: “Monopolies don’t lose customers."

The consequences of a successful Comcast/Time Warner Cable deal for Mediacom are more acceptable than the consequences of Title II regulation of broadband, Commisso said. The net neutrality rulemaking was highly political and partisan, Commisso said, characterizing it as Democrats trying to “take care of their base.” Mediacom invested in its infrastructure under one set of rules and doesn’t want them to change, Commisso said. "That’s a government intrusion into my business that’s absolutely uncalled for."